Health Insurance: The Scary Hole in America's Financial Plans
A financial adviser's open letter to Congress
Having spent a lifetime in the financial planning profession, I’ve done the right stuff — earned a good income, lived frugally and invested for decades with discipline and ultra-low costs. Yet despite my best efforts, as I sometimes tell clients, there is a massive hole in my own financial plan: health insurance.
Let me explain how that hole may ultimately cause my financial plan, and the plans of many Americans, to fail.
Higher Health Care Spending Than Elsewhere
As a past financial officer of the managed care consortium Kaiser Permanente and what is now the Anthem health insurer, health care is a subject that is near and dear to me. I recognized more than 20 years ago that health care costs would become too large of a proportion of the country’s GDP. Today, it is estimated that health care consumes 16 percent of our economy; it’s projected to be 20 percent by 2025. We currently spend twice as much on health care as other developed countries. In a global economy, where we must compete with other countries, spending so much more than other nations will make America uncompetitive, rather than great.
$100,000 in Annual Health Insurance Premiums
On a personal level, over a decade ago, I wrote that my family’s high-deductible health savings account (HSA) could cost $100,000 or more in annual premiums before my wife and I hit Medicare age — which is 65. Since then, I’ve seen my family’s premiums increase 20 to 30 percent annually. That’s under both Republican and Democratic administrations, by the way.
Though I’ve tried to fight the power of compounding by increasing deductibles and having my son go under a plan sponsored by his college, it’s only had a marginal impact.
Depressingly, a $100,000-a-year HSA is a good-case scenario considering that I’m one of the half of Americans with a pre-existing condition. Recently proposed legislation would leave me either uninsured or paying significantly higher premiums than the normal 20 to 30 percent annual increase I’ve seen. And there is always the possibility that the Medicare age will be raised before I turn 65, since that federal health program is in worse financial shape than Social Security.
My Open Message to Congress
Something has to be done, so let me address my concerns to those who have the power to fix it. Here’s my open message to Congress:
Why should Americans have to pay so much more than any other developed country to get the shortest life expectancy, and when are you going to actually do something about it? I’m requesting that Democrats and Republicans start acting like adults and address these two root causes:
- Health care providers currently have the financial incentive to do as many things as they can for patients rather than to keep us healthy.
- Our litigious society causes health care providers to perform unnecessary procedures (defensive medicine) so they can lower the risk of lawsuits and skyrocketing malpractice premiums.
Admittedly, reaching across party ideological lines won’t be easy, since politics has become something of a blood sport in America.
Recently, I found a health care conversation I had with a local politician (who is happily collecting his own government retiree health insurance entitlement) deteriorate into personal vulgarities and suggestions of “taking it outside.” Why? Because I pointed out the hypocrisy of those receiving taxpayer-funded health insurance insisting that the rest of us don’t deserve even the right to buy it at a reasonable price. He didn’t see it as a big deal if someone dies at 61 rather than 63. Pardon me if I do.
Congress: Be constructive, be civil, and, for a change, try shifting your efforts away from making the other party look bad and instead towards serving the interests of your constituents.
Let’s set the bar low — just bring our health care costs down to the most expensive of any other country. Not only will that help hundreds of millions of Americans, but the savings can be applied elsewhere, like stimulating the economy and paying down the national debt.
Continuing as you are will make America a third-world country, negatively impacting the financial health of all Americans and our economy.
No, I don’t have any delusions that Congress will start listening to me now. Though it would be great if fixing health insurance was given the priority it deserves, the fact remains that it is still an issue being thrown around like a partisan football.
However, unless it’s eventually dealt with, health insurance could prove to be the black hole that sucks our economy into it, along with our financial futures.